Finet's stock is rising from $2 a share over the last few months to over $10 a share, proof that the company's innovative ideas are being well received by consumers, says Finet president Dan Rawitch.

Rawitch is announcing the debut of Finet.com's new mortgage auction service which can be found on its new strategic partner's site, HomeSeekers.com. Consumers can also find the mortgage auction service at finet.com.

Rawitch says that in developing the auction product he wanted to come up with a business model that would beat the other mortgage auction services available. He did it by using a three-pronged approach to obtaining the best bid possible for consumers. Bids would come from participating lenders, from Finet, and from a company subsidiary, interloan.com. This way, explains Rawitch, the consumer has the benefit of comparing the best loan bids available.

Consumers are pre-qualified to get better bids

"We weren't sure that retail lenders are really ready to bid on loans," explains Rawitch, "because of the channel conflicts. They don't want to irritate their branch managers and loan officers."

"What we were finding is that these lenders would bid their normal rate. Where that is a problem for the consumer, is that if the consumer does get an aggressive bid, the lender still has "wiggle room." They can say, "Oh, I didn't know that you had a late payment or something like that. The loan will have to be renegotiated."

"Our business model is that we qualify the consumer first so that eliminates the wiggle room," says Rawitch. "We qualify them through iQualify, our award-winning automated approval technology. Now we know the consumer is approved, so when a lender bids, there is no turning back."

Consumers get competitive prices

Rawitch points out that just in case the lenders aren't bidding aggressively, Finet owns a mortgage banking company. "We will show the best bid from the auction to our trading desk and if we can beat the bid, we will," he says.

But wouldn't in-house competition discourage lenders from participating? "We hope it will keep them honest," replies Rawitch. "There is only so much margin in a loan. Large lenders should be able to beat what we can do. If they play fairly, they will be able to beat us, if they don't, we'll be able to beat them. It will level the playing field."

Finet also owns and will utilize the loan products from its Internet loan company, interloan.com. "Interloan pulls up the best rate from the eighty lenders it brokers and now the consumer gets to see the best bid from auction process, from Finet, and from Interloan. They will be able to see three rates for every type of loan product."

Consumers will be able to compare results from the bids on-line.

"The physical world consumer deserves this benefit and the Internet consumer demands it," says Rawitch.

Published: April 26, 1999

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